Shipping Cost in Product Pricing: Strategy Guide Shipping is a cost of doing business. Here's how to price products to ensure profitability regardless of shipping scenario.
Pricing Approaches
Options
Approach Description Best For Separate Product + shipping Transparency Built-in All-inclusive price Simplicity Hybrid Free over threshold Balance
Comparison
Approach Conversion Margin Separate Lower Clear Built-in Higher Blended Hybrid Balanced Controllable
Calculating True Costs
Cost Components
Component Include Product cost Landed cost Packaging Box, void fill, labor Shipping Average or actual Returns Expected rate × cost Transaction fees Platform, payment
True cost = Product + Packaging + Avg Shipping + (Return rate × Return cost)Price = True cost / (1 - Target margin)
Example:
Product: $10
Packaging: $1
Avg shipping: $5
Return rate: 10% × $12 = $1.20
True cost: $17.20
Target margin: 40%
Price = $17.20 / (1 - 0.40) = $28.67 → $29.99
Zone-Based Considerations
Shipping Cost by Zone
Zone Avg Cost Price Adjustment 1-2 $4 Base price 3-4 $6 +$0-2 5-6 $9 +$2-4 7-8 $14 +$4-6
Strategies
Strategy Description Average pricing One price, average cost Zone pricing Vary by destination Warehouse distribution Ship from closer locations
Weight and Size Impact
DIM Weight Pricing
Product Size Consideration Small, light Per-item shipping viable Light, large DIM weight issues Heavy, small Actual weight Heavy, large Freight pricing
Packaging Optimization
Action Savings Smaller boxes Reduce DIM Lighter materials Lower actual weight Right-size packaging Minimize waste
Marketplace Considerations
Platform Fee Impact Amazon 15% + FBA fees eBay 12.9% Etsy 6.5% + 3% payment Shopify Payment only
Strategy Description Same price Consistent brand Platform-adjusted Account for fees MAP pricing Manufacturer minimum
Competitive Pricing
Analysis
Check Purpose Competitor prices Market positioning Competitor shipping Total cost comparison Value perception What justifies higher?
Differentiation If higher than competitors:
Better quality
Faster shipping
Superior packaging
Brand value
atoship Cost Savings Reduce shipping costs:
Carrier discounts : Up to 89% offRate shopping : Best rate per packageCost reporting : Know your actual spendOptimization : Reduce costs over time
Margin Protection
Monitoring
Metric Frequency Product margin Per product Shipping cost % Monthly Blended margin Monthly By channel Monthly
Adjustment Triggers
Trigger Action Carrier rate increase Review prices Margin below target Increase or cut Competitor change Evaluate position
Conclusion Shipping costs must be factored into pricing strategy. Use atoship's discounted rates to minimize costs, calculate true landed margins, and price accordingly for sustainable profitability.
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